Thursday, July 28, 2016

Swiss Not Happy

***Export of Swiss Watches in
DeclineSwiss watch corporations are freaking out: the latest data shows
that the export of Swiss watches has declined for 11 consecutive months.
The reason apparently is the high Swiss Franc and the price of gold.
Richemont Group just fired 350 people and Omega is apparently contemplating
doing the same.

While this explanation may sound plausible to shareholders, the
problem is far more complex. The price of gold is on the rise, but gold is
still 30% cheaper than it was in 2012/13 when export was
booming.

In
May, Richemont CEO Richard Lepeu said Swiss watchmakers "should never be
arrogant" and shouldn’t rule anything out. "Technology's progressing
very fast, and we never know what might happen."Lepeu is referring to smart phones. Once again, it appears that
Swiss underestimated the impact of new technology: except for TAG, no major
Swiss watchmaker is interested in getting into the smart watch
business.

However, in my opinion the real reason for a decline in export and
sales is a more obvious one: the price of Swiss watches went through the
roof. The product is simply too expensive and there are only so many watch
buyers who can afford to spend $10,000 on a new timepiece every few months.
The other even more obvious reason is the crazy idea that Swiss watches
should be sold exclusively throughout 'brand boutiques'. Getting rid of
independent retailers who were able to sell volumes of watches at somehow
discounted prices is now firing back. Just a few years ago, one could have
bought a new Omega watch from a number of dealers located from North Shore
to Parramata. Today, there is just one independent AD who still has an
Omega account.The solution is simple: lower the prices, open more independent
retail accounts, make the spare parts available to independent watchmakers
and watch your export sales go through the roof.